Twenty-One
of the most important models in economics (micro and macro!) are
included in the Classic Economic Models
collection of EconModel applications.
www.econmodel.com/classic/

To the right is a diagram excerpted from "Who Pays a Sales Tax?"
Understanding this diagram, including consumer surplus and
producer surplus, is a benchmark for learning to think like an
economist.

Working with the Classic Economic Models will help you learn to
think like an economist (and get higher grades in your economics
classes).

Microeconomics

The
microeconomics collection includes Theory of the Firm and
Theory
of the Consumer.

To the left is a diagram from the interactive exercise on
profit maximizing behavior for a monopolist. The Classic
Economic Models also includes profit maximizing behavior under perfect competition and
price discrimination.

The Theory of the Consumer is based on the "Two Goods - Two
Prices" diagram, which provides a foundation for the demand
curve. The "Intertemporal Substitution" exercise extends
this analysis to explain savings behavior.

Turning the focus from supply and demand for output toward
supply and demand for inputs yields "The Demand for Labor" and
"Labor Supply, Income Taxes, and Transfer Payments."

Macroeconomics

The
collection of macro models is organized to convey a sense of the
historical progression of economic thinking about business
cycles. The models included are the
Classical Model, the Simple Keynesian Model (the Keynesian
Cross), IS/LM with and without flexible prices, the Mundell-Fleming
Model, the Real Business Cycles Model,
and the IS/MP Model.

To the right is an excerpt from the Mundell-Fleming exercise.
The Mundell-Fleming Model extends the IS/LM framework to allow
for trade in goods and capital flows between countries.
Users can choose between flexible and fixed exchange rate
regimes.

Financial
Markets

The
financial markets models include an analysis of "Utility-Based
Valuation of Risk" and "Mean-Variance Analysis: Risk vs.
Expected Return." An example of the former is shown to the
left.

Two online calculators determine present values and rates of
return for fixed income securities and for income streams that,
like dividends and personal income, that might be expected to
grow with inflation.